Housing prices are constantly changing, which can make both buying and selling a home more complicated. While it’s difficult to predict future changes, it’s important to understand the key factors that affect the housing market and home prices. Here are the five major things that affect housing prices:
The overall health of the economy is a major influence on housing prices. While made up of myriad factors, the “health” of the economy can usually be determined by employment data, manufacturing data and prices of goods. As the economy flourishes, housing prices increase. Likewise, if the economy is suffering, prices often decrease.
The fluctuation of supply and demand affects goods and services, and property is no exception. Because physical property is a finite resource, supply and demand can become extremely important in densely populated areas. The differences between a buyer’s and seller’s market is the amount of demand compared to the amount of actual housing inventory.
If the Federal Reserve changes interest rates, mortgage lenders have to adjust accordingly. This results in a different interest rate on your mortgage or loan. Even though the change may be less than a tenth of a percent, it can make a tremendous difference in housing prices. As mortgage rates increase, many would-be homebuyers cannot afford higher priced homes. On the flip side, lower mortgage rates can encourage more buyers to enter the market, which affects pricing through supply and demand.
The location of a home affects its price immensely. There are multiple factors in a location that can affect pricing, such as specific neighborhoods, highways, specific attractions or cultural interest, hospitals and schools. Home prices are higher in areas with rapid growth and lots of commercial activity. Some other location-based variables that can affect the price of a home include crime, healthcare access and proximity to industry.
Understanding the variables at play in the overall economy will help you navigate the housing market with confidence. Keep these factors in mind during your home search or selling process to stay up-to-date on what affects housing prices.
Kim Clark started her real estate career in 1999 and shortly thereafter obtained her Broker’s license in 2002. After working for larger, corporate offices, she realized that her business and clients needed a more personalized and flexible firm. She founded Bayside Realty Consultants in 2007 offering a space of unity, collaboration and encouragement for agents and their clients. Kim specializes in the unique Cape Cod market comprised of primary, vacation and investment properties.
She says "It is great to be a part of helping make a homeowner's dreams come true". Clients and their individual needs can make things very exciting! Kimberly's enthusiasm is contagious and it has been a real asset in her successful career. She says, "Never quit. Just do what you like and the rest just falls into place." She is certified in several real estate designations including GRI, CBR, CRS, e-Certified, and a certified trainer.
